Friday, June 22, 2012

Free RPG Day was successful once again this year, but I wanted to confirm that with some numbers. We bought two kits, costing a total of $180. It may be free for our customers, but retailers pay for the kits. To determine success, we have to consider our profit margin. A conservative net profit margin I like to throw around is 5%. Most game stores are probably in the 5-8% range, but let's stick at the low end of the spectrum.

A 5% net profit margin means I need to sell $3,600 in games to cover the $180 cost of Free RPG Day. So did I crack that nut? Indeed, with sales of around $4,400. That's a very good day for us, in case you were wondering, and in years past, we did this on a smaller scale with just one kit.

But was it all RPG sales? Of course not, and that's good. The thing about Free RPG Day is it brings in a particular type of customer, the alpha. Alpha gamers are cross departmental shoppers, so the day looked pretty normal as far as sales distribution, only it was far higher in volume thanks to the many visiting alphas. That might not be great news if you're an RPG publisher, but as a retailer, it's all good.

There are, of course, opportunity costs. An all day Saturday event takes up a critical time slot. A dead Saturday for us is considered a missed opportunity, so to have an event break even or not perform well is a real problem. We could have had a Magic tournament or something similar, so that could be factored into the cost of Free RPG Day, if you were looking to be overly critical. Still, it was a profitable day regardless.

Also don't forget that as a business, advertising expenses should be part of our cost of doing business. It's already built into that 5% profit margin, making it virtually free if it was properly budgeted. Retail stores, according to the experts, should spend between 2-4% of their gross on advertising, although few in the game trade do.

I have a heck of a time getting close to that 2% mark myself and I know most stores neglect this area almost entirely. I would suggest starting a budget with industry supporting events like this as the cornerstone. I generally detest anything sold to me as a "marketing expense," as it's usually code for "we can't figure out how to make money doing this," but in the case of Free RPG Day, it's legit.

As a store owner, I can say this event is successful for me. It might not work for everyone, but remember before dismissing it that it's not just an RPG event, and it's money that should be spent anyway. As for the publishers, they'll need to decide for themselves.

Thursday, June 21, 2012

Today I want to tackle the very serious problem of space hogs. Some inventory takes up a disproportionate amount of space. How do we determine what's disproportionate? It's a sales per square foot metric.

We just completed a significant re-organization of the store. When we do this, as we did a couple years ago, I like to ponder if we're using our resources to our best advantage, so I created a new graphic to represent each department, with the square footage of the store divided by its sales contribution. Thankfully, the new layout has opened up a lot of space for us, about 100 square feet, but how does the existing inventory actually perform using this metric? If I were to expand into that 100 square feet, which departments would be most deserving?

This diagram uses sales per square foot so that it can be compared to the physical footprint of each department. Used games were added for the first time, which tends to squeeze the existing departments a little bit when compared to the previous chart. This type of diagram doesn't mean a lot until you envision the store and how much space each department takes up. Try to imagine that in your head, if you know the store layout. Then look at the diagram.

The first thing you notice is how collectible card games and their related supplies dominate, which is nice because they take up very little space, and certainly no more space than when they were average sellers.

Departments like miniatures, we see here, have ceased to perform, really, as well as puzzles and toys. Toys and miniatures don't take up a lot of space, unlike puzzles, and can be generally forgiven. However, puzzles seem like an enormous waste of space when you compare their physical footprint to their sales per square feet. This chart screams "dump puzzles!"

That's why I do these kinds of exercises. What might seem reasonable under a turn rate analysis (puzzles don't have terrible turns), show up to be insanely inefficient with a different metric, or just the opposite. The smaller your store, the more important this type of efficiency.

Friday, June 15, 2012

We've spent over a thousand dollars attracting people to our Black Diamond Games Facebook page. Despite some early concerns, I do believe Facebook advertising is effective. Facebook has a problem, however, as businesses like mine are beginning to hit a saturation point. With close to 2,700 fans, we're seeing our rate of new people slow down quite a bit. It's still growing, but effectiveness of this type of advertising, getting new people, is diminishing. In fact, it may actually be to our benefit to weed out fans, especially those from out of the area.

Facebook has come up with an ingenious method to continue to extract revenue from us. They've taken our fans hostage. Their justification, according to a Facebook employee, is this: with so many pages and groups and friends, there is no way Facebook could possibly show you everything everybody has to say. So instead, they've created a secret algorithm allowing you to see some of those feeds, sometimes. Never mind, that users could prune their communication, like I recently did, cutting down pages I followed from 650 to around 225, Facebook will do this for you.

So to reach those 2,700 fans, Facebook recommends I promote my posts by paying for them, from around $5 to $15 for each post. Such promotions do, in fact, work and suddenly that very low percentage of user interaction we've seen, thinking we were just being boring, jumps tremendously.

It also means those fans from out of the area, many of whom are very active, are now a liability. Don't go anywhere yet, but you could see where I wouldn't want to pay for them. They arrived organically, but when it comes to promotion of posts, I have no say in how Facebook targets our community. If I'm wrong about how this works, please let me know.

So is it ethical? Is it right? It's certainly effective to give in, as you can see below, although it means our cost for Facebook advertising has probably doubled. For us it will mean a shift of advertising dollars more towards Facebook and less for Google and our TV advertising. I hate to reward bad behavior, and I still avoid Yelp after their attempts at extortion, but Facebook really is a revolutionary way to reach our customers.

Edit: Here are instructions on how to get your posts back as a Facebooke user.

Tuesday, June 12, 2012

I sent a good friend to the store over the weekend to buy Dominion to play with his 8 year old son. He got
upset and chided me about not knowing my own stock. Whatnow? The age recommendation on Dominon and all the expansions says 13+. Dominion suddenly got a lot harder to play.

I assured
him it should be 8+ and sent him a boardgamegeek screenshot of the game summary
being 8+ and the user recommended age of 10+. I mean, I'm not losing my mind, am I? He reluctantly bought the game and he and his 8 year old had a
great time playing. End of story.

So what's the deal with the recommended age change
on the box?

Asking around, the culprit appears to be CPSIA, the Consumer Product Safety Improvement Act. This is one of those laws that came about after the public outcry over lead in toys. The law was written in 2008, but the testing requirements were delayed until February of 2011. So now we're seeing the full effect of that law.

If you market games to children aged 12 and under, you've got a child's product, according to the act. You have to comply with lead, pthalate and "mechanical" requirements, warning labels regarding small parts for 3 years old and younger kids, and most importantly, most devastatingly, expensive third-party testing.

It must be a good times to own a third party testing company. For example, testing blocks for a game costs about $500, but with 10 samples required, that cost goes up $5,000. That's just one component of one game, now multiply that number by each of your components and each of your games.

This will likely have several effects on the game trade:

Nobody will make games for children unless it's their specialty.

All adults oriented games will be labeled 13+, regardless of complexity.

Those who want to market games to children will generally be mid to large companies, reducing selection for consumers.

Games for children will be fewer, more expensive and simple to cover testing costs, making independent games for kids that much harder to sell.

That 13+ label has significance as it allows you to avoid a lot of this pain. If the manufacturers can manage to wiggle out of the children's product category, into the general category, their testing parameters are apparently less stringent.

If a consumer older than 12 years of age is as likely, or more likely,
to interact with a product than a child 12 years of age or younger, then
the product would probably be considered a general use product,
depending upon how the product is viewed, using all of the four factors
above. Products used by children 12 years of age or younger that have a
declining appeal for teenagers are likely to be considered children's
products.

This is one of those rare cases of the federal government getting in the way of small business in a ridiculous fashion. I say it's rare, because I tend to say local government is the root of all evil. The federal government neglects small business, which apparently is a good thing if you talk to big business.

Getting in the way of small business is the job of local government; perhaps it's a states rights issue. Like how my local county farm bureau taxes my point of sale machine or how this month the board of equalization collects an extra two weeks of sales tax to create the illusion the state budget has more than it does. Or how my city government demands permits and building requirements that aren't required by law. Or warning signs regarding spray paint. Or video games. Or products containing lead. Or the sign requirement that I can't have signs. That's all local. Local government is to be avoided at every opportunity by small business, but the federal government? It's virtually invisible.

Politics aside, this does a huge disservice to the game trade. There are games that are clearly for children, dominated by big companies like Mattel, Hasbro and SpinMaster. The toy trade has a plethora of small game publishers, and this is a disaster for them. If you were a game designer, would you want to design a game for a 5-year old or a 13 year old? You might not have any economic choice in the matter now. Small toy companies are working to reform the law for small manufacturers.

For now, we'll have a low age range dominated by the giant corporate toy and game makers, an empty middle (tons of board games are designed for ages 8+or ages 10+), and most independent games in the 13+ category. That's a huge segment of the game trade that has just been nuked by this law.

Sure, games for ages 8-12 will still exist, but the end result will have been taking helpful labels and making them useless. It will be up to the parent to do the research for what's appropriate (which is unlikely to happen) or rely on store staff to override what the box says (virtually impossible, as was demonstrated). It also just made games far easier to buy online, since you can find the truth there. The law we're really discussing is the law of unintended consequences.

Sunday, June 10, 2012

Below are our top 25 RPG best sellers for the last 30 days by quantity sold. Pathfinder dominates again, although the top spot goes to the Dungeon Crawl Classics RPG, a clever "old school" style fantasy RPG by Goodman Games (l love The Funnel). Our local experts are giving us some excellent feedback.

I'm hoping distributors get more copies of DCC, as they're sold out and I know there's more demand. The game also stumbled a bit when it took us a while to hunt down the funky polyhedral dice needed to play the game. Some coordination there would have been helpful. The first module for the game is already out with a couple copies sold (another struggle, as some distributors ordered light), but it didn't make this list.

Also note the two novels by Evil Hat at the bottom of the list: Don't Read This Book and Dinocalypse Now. These came out last week, so they're still new, but they look promising. I've just started reading Dinocalypse Now and it has been entertaining so far.

Saturday, June 9, 2012

In 2005 I made a small killing in D20 compatible role-playing games. Throughout the country, distributors and stores had cases of dead product. These were Dungeons & Dragons compatible D20 books. Some cases were just a few copies of each, while others were cases of the same product. This was the predecessor to our "ding & dent" sale, where we would buy up dead and damaged games to resell to our customers (and for a while, online).

I would buy D20 stuff literally, for pennies on the dollar, sight unseen. I had missed the D20 glut as a store owner, and hadn't been burdened with all these books bought originally at 40-50 cents on the dollar. This might be hard to believe, but hundreds of these books were released each week for a couple years. So with tubs of D20 books, I happily sold them for a dollar or two a piece, prices at which even a crummy book purchase could be justified if only to cut it up and steal its artwork for your game. Some would never, ever sell, and would be given away or recycled when giving it away had failed.

This destroyed my reverence for books; sad for a gamer and someone in a religious tradition that reveres books tremendously, but somewhat necessary for a new retailer. Now I have a more "circle of life" approach to books and publishing.

To summarize the situation, and believe me, it has been written about extensively, the early D20 era allowed for 30 years of pent up vanity project demand to explode into the game trade. Every guy with a home brew world, new take on druids, or a hankering to write that sex gaming book got their chance. Publishers, new and old, wrote books on incredibly narrow topics, sometimes an entire book on one type of minor monster. There was some amazingly good stuff that still graces my shelves and entire companies that came up during that time thanks to D20, but there was a ton of crap.

There were deadly adventures that had no concept of challenge ratings or appropriate treasure and books of magic items made from fan submissions over the Internet. Quality control was lacking, to say the least. I know because I happily bought it in bulk once the market crashed, making a tidy profit on the same stuff my competitors still had languishing on their shelves at full price, and would continue to allow to languish for a few more years. I mention all this because it reminds me a bit of Kickstarter.

Kickstarter once again allows for the vanity project and the amateur to enter the game trade (it's about 1/3rd amateur when it comes to RPG projects). This time there are even fewer constraints on planning, distribution, and sales. While during the D20 glut, purchasers may have been asleep at the wheel, the gatekeepers for the industry, with Kickstarter, there are no gate keepers other than the customer who must be snowed by a good descriptive video or some text. Rejoice and be merry as the publisher has been liberated from the tyranny of their own trade. They have sloughed off their chains and can now become funded by the customer, with the distributors cut now going to our good friends at Amazon, who have done nothing but help the game trade. What could possibly go wrong?

Kickstarter is an amazing system for sure, but it smells a lot to me like the D20 era of glut, poor quality and questionable business practices. So far I'm personally about 70% satisfied with what I've received from the projects I support. However, where else in your consumer life would 70% be acceptable? What recourse do you have when the product doesn't deliver or the project fails and they take your money? Well, none, and unlike the D20 glut, there aren't cases or shelves of dead product at the end to let you know you've been hosed, either individually or collectively. Kickstarter projects don't grace shelves of stores to remind us of their sins.

So yeah Kickstarer! I support a dozen projects for the store, but with more of a marketing fund, rather than anything resembling my purchasing budget. I still support almost every project that allows for a retailer option, but I'm getting a bit soured. If you support a project, consider it a personal loan to a guy you don't know to make something he probably hasn't fully conceived (stop emailing me and just make it, dammit), using money in advance you can't get back. Figure 70-80% success. I'm not trying to kick Kickstarter in the teeth, but some of what I see wouldn't make it past traditional gate keepers for a reason.

Friday, June 8, 2012

I just finished reading Death's Heretic, a Pathfinder Tales novel by James Sutter. The usual experience of D&D fiction is you trade truly gripping story telling for the experience of immersion in your beloved game world. Story often takes a back seat to D&D style combat and rules compliant magic. In my experience, even good setting fiction tends to be just alright, rarely up to par with the top fantasy authors of the day. Death's Heretic was an exception, and it was because of the skillful writing.

James Sutter has a way with descriptions, which tend to be both concise yet vivid. His writing flows smoothly, whether we're following his main characters across the desert or across the planes of existence.

Death's Heretic is more
intellectual than the average RPG novel, dealing with topics such as personal faith, mortality, and self actualization in an honest, adult manner that you don't normally find in this type of fantasy. It carries on the Paizo tradition of fearlessly tackling adult topics without worrying about some kids mom, the impression you get from more mainstream publishers.

Besides satisfying our intellectual curiosity about religion and the make up of the (Paizo) planes, the story is also a mystery, a burgeoning love affair between complex
characters, and as mentioned, just stunningly well written descriptions.
Fighting takes a back seat to all this, which is fine. When there is action, it's smooth and relatively easy to follow and is always used to move the story forward. There's no "sending in the ninjas" just to add some action.

As for delivering on setting exploration, which is why many of us read (slog through) these types of novels, Death's Heretic does an excellent job. The novel explores some of the desert kingdoms of the Inner Sea that don't get much attention, describing their various differences, whether it be geography or religious beliefs. There is quite a bit of plane hopping as our heroes uncover the mystery of a stolen soul. Paizo uses a modified "Great Wheel" planar cosmology and although I've read their planar book, The Great Beyond, this was my first experience with how that information might be applied.

So while the other Pathfinder Tales books are pretty good, Death's Heretic was an excellent novel and I look forward to seeing more from James Sutter, whether under a Paizo imprint or on his own.

Thursday, June 7, 2012

Within the spectrum of disappointed customers, there is the one who looks in vain for the game they played as a child, or even the game they saw last year but couldn't yet afford to buy. As Summer begins, I see a lot more of these disappointed people, who usually aren't hobbyists, but just folks who like the occasional rainy-day game. Converting them to something new is a big part of our job, but they're resistant to it. As a customer, I'm often disappointed at book stores, where it seems the classics of my youth are missing and the history section is composed entirely of books on Egyptian pyramids. You're going to have a hard time selling me a book on pyramids when I want to read about Phoenicians. So what's going on here?

There are a couple factors. First, as I've written before, inventory is a zero sum game. I have a set amount of money to spend on inventory, so every new item requires an old item to be retired, as I try to re-coup those inventory dollars for the next thing. If I add more capital to my purchasing budget (we increased inventory dollars by 15% last year), then I can enlarge the pie, but generally it's a process of swapping the old for the new. Plus there is a limit to increasing inventory dollars based on my market, and if my market is shrinking, like in the book trade, it hardly makes sense to add a new section on Phoenicians.

The second factor that accelerates this process is the speed of releases. When it comes to what's a successful book, 5,000 or so is a
very good release number (supposedly 98% sell less than 500). I think the game trade follows a similar model. Evil Hat, a small RPG publisher, shows that about 25% of their titles fall into the category of 5,000+ sales.

With about 3,000 game
stores, that's a little less than 2 copies per store. However, it's far more complicated. As with Evil Hat's Don't Read This Book, , their nearly 5,000 sales include a variety of distribution channels, with only 20% of sales being brick and mortar stores through distributors. Those, I would speculate, are likely the 10% of "alpha stores" that tend to carry the more fringe game trade products. With some bistro math, I would guess 300 stores eventually order 3 copies each (but only the distributors know for sure).

Finally, there are the "disruptive" factors that bypass or throw a monkey wrench into the system. Kickstarter, for example, goes direct to the consumer. Remember that the consumer is the limiting factor in all this, and stores compete for their money, whether it be a new movie release or a Kickstarter project. Electronic products have been a competitor for years for consumer dollars, although some would incorrectly argue that the product is different than the physical copy. It hardly matters, because the consumers disposable income is also a zero sum game. A dollar on a PDF or an ice cream cone is a dollar out of that budget that can't be spend in a game store.

Possibly the holy grail to a lot of publishers, is the mass market. A game in Target or Wal-Mart promises to expand the game market, bypassing the gamer ghetto. However, that end to exclusivity clearly hurts the independent stores who see sales of those games slow or dry up completely. A good number of our regulars, especially CCG players, will think nothing of picking up games at Target or Toys R Us, if it's convenient. The pie is resistant to growth. A clear example of this has been observing sales resulting from the Tabletop program turbo charges sales of games featured on the program, unless they're available in mass market stores like Target, in which case, not much happens.

And what happens when Ticket to Ride or Small World go electronic? Does the pie get bigger? When the pie gets bigger, do the mass market stores naturally gobble up the low hanging fruit? What is the period in which small stores may feast on success before big stores kick sand in their face and steal their candy? Is that time period increasingly smaller? As a retailer, these are interesting times.

Monday, June 4, 2012

I recall walking out of Flying Colors Comics years ago and turning to a friend and saying, "Yeah, I could run a store, but I don't want to spend my life managing some kid with blue hair." In other words, there was a part of store ownership that I found intimidating, and that was managing people.

Before owning a store, I had management experience, and actually a little bit of training. But that was managing professionals, which in the IT world often meant buying the occasional pizza for late night techs and relaying directives from my bosses. That's because professionals tend to act, well, professional.

I didn't know anything about actual management, something that became apparent when I had to deal with employees in my store with personal problems, who couldn't show up on time, who stole, who were poisonous, and all the range of human experience. Or more importantly, mentoring them to perform better and move up to a higher level. There was no HR department to consult, but I managed to muddle through, often with the phrase in the back of my mind, "Don't make me be the manager."

Today I learned from my manager Michael how he handles my project directives. If I ask for something once, I'm brainstorming and he makes a note but doesn't do anything, but if I ask for something twice, then it's clear I actually want it done. This is because of a couple factors. First, Michael has been tasked to be fiscally conservative, which he is very serious about. He has a company credit card and purchasing authority, so I trust him. Second, because I manage on more of a consensus basis, he knows the mission of the company and the direction it's headed and has a role in that.

He keeps me in check with the former and verifies what I want matches the mission with the latter. He'll often ask, "Are you sure you want to be the store with X?" "X" might be a stripper pole, a binder of Yugioh cards or a TV lounge, all of which he knows I don't really want. For this triage method of sorting directives, I thank him.

Now, I've worked under a variety of bosses, too many to be honest, based on my ronin IT background of job hopping (that's where the money was at). I've seen drill instructor bosses that expected their every command to be immediately granted. I've even been in Zen centers or Japanese martial arts studios where when the master so much as expressed interest in something, it was treated like a life or death directive. "Ahh, I do like the flavor of Jasmine tea" meant go right now and get the master some goddamn tea. In my last job I was completely ignored for six months, during which time I built a game store. As an employee, I don't care, I try to figure out what to do regardless, because I'm a professional.

However, how am I as a manager? As a manager, I'm reluctant and don't really want to manage at all, but see it necessary for where I want to be in my business. I've got five employees and need them all. So for me, it's about getting the staff on the same page, getting a ton of input, especially since they run the "real" store, the one with the events, followed by careful deliberation, a clear decision, and never, ever looking back (it's a hippy interpretation of Confucius).

The only thing I have to show for my method is that the store is doing well, employees are happy, and stuff gets done. So it works for me. My point then is not to be intimidated by the kid with blue hair. Or it might be something else, like accounting, technology, purchasing or even sales. Find what works for you to overcome the challenge and don't feel like there's one right way to do what needs to be done. Delegate if you must. This is small business. You're the man. Do it your way.

Saturday, June 2, 2012

It's easy to complain, and since misery loves company, feedback reinforces and promotes it. I really do love what I do. Over time, what I do feels increasingly abstract and ephemeral. I generally know what will happen next week, next month and a year from now. The details begin to fade, "Matrix" style as you see the zeroes and ones that make up daily life. Still, there are some very concrete feelings I still have about owning my own store that make going back to anything else seem unthinkable. Here are 20 off the top of my head. Feel free to add more in the comments. It's generally a good life.

Waking up in the morning without a feeling of dread.

Doing something I can easily explain to my kid.

Building a place where I want to spent my time and never compromising on this.

Surrounding myself with things I think are cool.

Arranging my environment to my precise specifications.

Creating systems that accentuate what I like and want to do while delegating the rest.

Not having to compromise my morals or beliefs for the good of the company.

Getting to see or at least hear about awesome hobby stuff before everyone else.

Having the pick of the best gamers, if I so desire.

Knowing I'll never be laid off and that I'm sheltered by most "macro" economic conditions.

Knowing my "self power" has gotten me this far and that only good decisions and hard work can get me farther.

Knowing my finances and future are in my own hands and not someone elses.

Getting to meet interesting people with similar beliefs who are happy I'm there to exchange cool stuff for money.

Appreciating the communities that have evolved from what was built, even if I'm not part of all of them.

Surrounding myself with cool, competent employees that I ultimately select.